> For the complete documentation index, see [llms.txt](https://docs.syndromics.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.syndromics.xyz/risk/framework.md). # Risk framework Syndromics treats risk management as the product. The protocol's promise to lenders is solvency, and its promise to borrowers is that liquidation will be fair and predictable. This page lists the material risks and the mitigation for each. Detailed pages follow for oracles, the sequencer, the issuer, and the history the design is built on. ## Risk register | Risk | Severity | Mitigation | | ------------------------------------------------------------------------------------- | ------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Issuer risk on Stock Tokens (Jersey debt instrument, freeze rights) | High | LTV tiers price it; bytecode review for freeze roles; proof of reserve surfaced where a feed exists; concentration caps per token. See [Issuer risk](/risk/issuer.md). | | Weekend and closed-market price gaps | High | Session-aware haircuts, bounded auction floors, lender opt-outs, conservative tier LTVs. See [Oracles and market sessions](/risk/oracles.md). | | Thin DEX liquidity for single names | High | Dutch auctions instead of DEX dumps; in-kind liquidation; per-token caps tied to observed depth. | | Regulatory change (classification of the lender-side instrument across jurisdictions) | High | Professional-lender-only lending; geo-fencing; modular eligibility so rules can tighten without redeploying. See [Compliance model](/compliance/model.md). | | Sequencer centralisation or outage | Medium | Uptime-feed grace period; every function reachable through the L1 delayed inbox. See [Sequencer and chain risk](/risk/sequencer-and-chain.md). | | Oracle failure or manipulation | Medium | Chainlink Feeds and Streams cross-check, staleness bounds, move caps, `oraclePaused` halt; price the exact token, never a wrapper. | | Smart-contract bugs | Medium | Immutable minimal core, formal verification, two audits, public contest, bounty, staged caps. See [Security programme](/architecture/security.md). | | Low lender participation, empty book | Medium | Standing offers, idle-capital yield, seeded professional lenders. | | Chain activity skewing to memecoins rather than RWAs | Medium | Focus on the $100M-plus of Stock Token and RWA holders who already exist; growth tracks Robinhood's tokenization roadmap. | | Competition from pooled markets adding single-stock collateral | Low to Medium | Fixed-term, isolated, long-tail and syndication features that pooled markets structurally cannot offer; interoperate rather than compete. | ## How parameters are set Every risk parameter (tier LTVs, haircuts, staleness bounds per session, move caps, auction curve, penalty split, per-token caps, whitelisted vaults and oracles) is: 1. proposed with a written rationale and, where possible, backtested against historical price data, 2. published for the full timelock period, 3. executed on-chain with an event, 4. listed on the public governance log. See [Parameter governance](/transparency/governance.md). ## Operating posture The market is deliberately guarded: * Tier A and B collateral only. * A visible dollar cap per token, starting small. * Professional lenders and verified business or professional borrowers only. * A public risk page showing LTV distribution, concentration, bad debt (target zero) and liquidation history with realised prices against oracle. Caps grow as liquidation and repayment data accumulates, not before. ## What the protocol does not protect against Being explicit about the limits matters as much as the mitigations: * A lender who prices a slice badly loses on that slice. That is the design. * A borrower who ignores warnings will be liquidated at the auction price, which may be below oracle, especially in a closed market. * Issuer failure is a real loss scenario that LTVs reduce but do not eliminate. * Tier D loans have no liquidation and rely entirely on the borrower repaying or the lender accepting the collateral. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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